[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

[RT] Re: GEN - Price shock



PureBytes Links

Trading Reference Links

This is often one of those gray areas. Many charts which I see with
sudden price moves provided clues well in advance to the experienced
tape/chart reader (not that I can claim not to have missed many of
them). I believe that event news distribution is most frequently
non-linear i.e. there are always some who are able to anticipate the
event from external clues or are privy to internal information. In any
event, the price change begins slowly and then moves suddenly as the
media learn of the event as the formal announcements are made. The
opportunity lies in the early stages where the price action fails to
perform according to what might "normally" be expected and gives the
chartist the opportunity to increase defensive measures.

One example which comes to mind at the moment is gold which appears to
be getting wound for something big (again). During the period 02Jul99 to
20Sep99 the daily chart showed classic signs of both bottoming and
accumulation in a tight 10 point range (look at daily OBV). Frankly, I
got so tired of watching gold go sideways that I forgot to check on it!
On 21Sep it made it's initial sharp gap move off the low which was a
whole 5 points in a range expansion. The next day it gapped again and
consolidated in a tight bar. The next day it performed an outside
bullish reversal of the consolidation bar and closed above the 3 month
high - now a whole 12 points above the recent pivot low and 14 points
above the 22 year historical low - there were clearly 3 days where the
alert tape reader could see that something new was happening which was
driving price off a 22 year low. The 70 point panic of the next 3 days
unfolded as the world's central banks announced that they had
reconsidered and would not be dumping all their gold reserves.

I think it would be very hard to develop a system which can
differentiate between early event news and a routine correction. I also
suspect that this is one area where a tape reader (one less easily bored
than was I) has a strong edge over a system.

Earl

----- Original Message -----
From: "Dennis Holverstott" <dennis@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, January 28, 2000 12:06 AM
Subject: [RT] Re: GEN - Price shock


> in the chapter. In his context, a "price shock" is by definition
> unexpected and unpredictable. If it were expected, it would not be a
> "shock." The main emphasis is for the system developer. He should:



Attachment Converted: "f:\eudora\attach\GC_CC1.gif"